Agency told to collect ad tax, but with a rider

The Hindu      26.11.2010

Agency told to collect ad tax, but with a rider

HYDERABAD: Greater Hyderabad Municipal Corporation (GHMC)’s ongoing
saga with USM Business Systems, the private agency chosen to collect
advertisement tax from signboards, is still on.

Bank guarantee

A fresh move is on to let the agency collect the tax but with a
rider. It being asked to cough up Rs. 30 crore as bank guarantee as
payment for the remaining two years period to collect the ad tax from
signboards on behalf of GHMC as was directed by the High Court.

But, the agency has only four months left of the three-year contract
to collect the tax amounts from an estimated 1.5 lakh signboards as the
period ends by March next. Ever since ad tax collection was outsourced
to the agency, there have been vehement protests by traders over the
method of collection.

Lot of complaints began to pour into GHMC head office alleging
‘harassment’ by the agency personnel. Even as the municipal corporation
decided to annul the contract and even sent a notice, USM as well as
traders approached the HC for different reasons. HC while entrusting the
tax collection job to GHMC had also asked it to follow due procedures
to cancel a contract.

It gave ground for the agency to seek permission to collect the tax on the civic body’s behalf for the remaining period.

Frontage arches

Tax was being collected for frontage arches, brand names, mobile ads,
boards, umbrellas, pole panels, banners, etc., at the rate of Rs. 1,200
per square metre and Rs. 600 per sq.metre for vinyl boards.

USM has assured Rs. 10 crore, Rs. 12.5 crore and Rs. 15 crore as
payments. It also paid up Rs. 6 crore and another Rs. 4 crore in bank
guarantee in the first year.

A three member panel of Additional Commissioners of Planning, Finance
and Advertisements are finalising the details of the fresh agreement to
be put in place in case the agency consents.